Phil's Personal Finance Tip of the Day:
The Key to Retirement Success is Simple
Published September 26, 2012
Bankrate.com
As the clock ticks and retirement looms, millions of Americans are worried. Thanks to a combination of overspending, undersaving and damage caused by the recent financial crisis, too few have saved too little for their golden years. The crisis has also caused retirement planning to be less of a priority for most citizens who are trying to make ends meet.
Alfonso Canella says the resulting retirement crisis should be obvious to everyone. The senior lecturer at the Brandeis International Business School in Waltham, Mass., says most workers will build their retirement on the principal of their savings, not on investment returns. Retirement planning should not be pushed to the bottom of your to-do list. His message is that people must start saving immediately and must squirrel away more than they think they will need.
As he says, "It's that simple."
The recent financial crisis has had a major impact on all aspects of the retirement system -- defined contribution plans, such as 401(k) plans, as well as defined benefit plans, or pensions.
What is most problematic from your point of view?
The largest problem is the woeful undersaving in the private and public sectors. If you have a defined contribution plan, or DC, which is the plan where you put away pretax dollars into, say, a 401(k) plan. These plans, which are most prevalent in the private sector, allow a worker to contribute up to $22,500 per year pretax. (Editor's note: The limits are $17,000 for workers up to age 50 and $22,500 for workers 50 and older.)
Read more: http://www.foxbusiness.com/personal-finance/2012/09/26/key-to-retirement-success-is-simple/#ixzz27hF3zfWP
Mark 9:23 — Everything is possible for one who believes.
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